Stocks finally fell under the pressure of their own weight after nearly a month of unrelenting upside. Stocks slid at a single day loss not seen since March on Thursday. The aggressive selling came after digesting the FOMC meeting and possibly news reports of a second wave of covid-19. The Federal Reserve did not outwardly make any hawkish moves, in fact they figured they would keep interest rates near zero for another two years. What spooked investors was the tone from Jerome Powell that economy does in fact still have a steep and long road to recovery. The following day there were a number of news reports of data suggesting second wave of corona virus activity particularly in communities that had recently reopened their economies.
Both events seem very trigger worthy but its important not to forget that the market had put itself in position to be disappointed. Stock prices climbed too high too fast. Investors now have the weekend to speculate and worry whether Thursday was a healthy pull back and buying opportunity or if we're on the verge of a second March. If anything its a wake up call to those who have forgotten the stock market can go down. FOMO and walls of worry are not healthy for markets and create set ups exactly what we saw Thursday. The best case from here, especially for those who are long stocks, is increased choppy action that has is slanted in growth. Expect volatility to hold reign going into next week but at the same time don't let the moves take over your emotions. Pull backs and swings are a part of markets and investors should accept them as part of the game rather than be overcome with dread.
All the TSP stock funds were down more than 4% with the S-fund lagging down 6.2% for the week. Bonds climbed 0.71% to outperform the TSP funds for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 12th:
The SPY (S&P 500 / C-fund) remained in a tight and flat trading range for the first half of the week unable to pierce the open gap above. The index then gapped down and sold off intraday Thursday eventually closing near its lows below its 20-day EMA. The index had a strong open the next day but faded and eventually ended the week below the 20-day EMA. The 50 and 20-day EMAs still stand as possible support along with the rising trend that held as support Thursday. Another open gap lies just below where the 50 and 200-day currently stand. The C-fund ended the week with a loss of 4.73%.
The Dow Completion Indices' (S-fund) had very similar action as SPY but fell at a higher magnitude on Thursday. The 200-day EMA was the support for this index which held up Thursday and Friday. This is a good sign for the other indices that have yet to test their 200-day EMAs. Nevertheless the S-fund lagged the TSP funds for the week with a loss of 6.20%.
EFA (EAFE Index /I-fund) did fall below its 200-day EMA Thursday but its 20-day EMA marked the lows of the week. The index ended the week even with its 200-day EMA but is below the rising trend line. The current price is surrounded by open gaps. The 50-day EMA sits between the current price and the open gap prices below. The I-fund was down 4.23% for the week.
Just as had happened in mid-May, BND (Bonds / F-fund) spent only a day below its 20-day before jumping back above and trading higher. This week the bond market was up after the FOMC meeting. The F-fund was up 0.71% for the week to outperform the TSP funds.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
Both events seem very trigger worthy but its important not to forget that the market had put itself in position to be disappointed. Stock prices climbed too high too fast. Investors now have the weekend to speculate and worry whether Thursday was a healthy pull back and buying opportunity or if we're on the verge of a second March. If anything its a wake up call to those who have forgotten the stock market can go down. FOMO and walls of worry are not healthy for markets and create set ups exactly what we saw Thursday. The best case from here, especially for those who are long stocks, is increased choppy action that has is slanted in growth. Expect volatility to hold reign going into next week but at the same time don't let the moves take over your emotions. Pull backs and swings are a part of markets and investors should accept them as part of the game rather than be overcome with dread.
All the TSP stock funds were down more than 4% with the S-fund lagging down 6.2% for the week. Bonds climbed 0.71% to outperform the TSP funds for the week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 12th:
The SPY (S&P 500 / C-fund) remained in a tight and flat trading range for the first half of the week unable to pierce the open gap above. The index then gapped down and sold off intraday Thursday eventually closing near its lows below its 20-day EMA. The index had a strong open the next day but faded and eventually ended the week below the 20-day EMA. The 50 and 20-day EMAs still stand as possible support along with the rising trend that held as support Thursday. Another open gap lies just below where the 50 and 200-day currently stand. The C-fund ended the week with a loss of 4.73%.
The Dow Completion Indices' (S-fund) had very similar action as SPY but fell at a higher magnitude on Thursday. The 200-day EMA was the support for this index which held up Thursday and Friday. This is a good sign for the other indices that have yet to test their 200-day EMAs. Nevertheless the S-fund lagged the TSP funds for the week with a loss of 6.20%.
EFA (EAFE Index /I-fund) did fall below its 200-day EMA Thursday but its 20-day EMA marked the lows of the week. The index ended the week even with its 200-day EMA but is below the rising trend line. The current price is surrounded by open gaps. The 50-day EMA sits between the current price and the open gap prices below. The I-fund was down 4.23% for the week.
Just as had happened in mid-May, BND (Bonds / F-fund) spent only a day below its 20-day before jumping back above and trading higher. This week the bond market was up after the FOMC meeting. The F-fund was up 0.71% for the week to outperform the TSP funds.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
Facebook | Twitter
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
